Glenn Gunter v. Farmers Insurance Company
2013 U.S. App. LEXIS 23397
| 8th Cir. | 2013Background
- Glenn and Lisa Gunter's home flooded on Dec. 24, 2009; mortgagee had an NFIP SFIP through Farmers (WYO carrier) for $87,900 and the Gunters had a $16,100 supplemental policy from American Security.
- The Gunters submitted a timely proof of loss claiming $12,488.04 (plus $249.73 for building replacement); Farmers inspected, relied on an engineer report finding most structural damage unrelated to the flood, and paid $12,237.77. American paid $1,610 for a shed and denied residence damage.
- The house was later condemned and demolished; remaining mortgage balance was $69,487.07. The Gunters sought additional recovery but did not file any supplemental proof of loss for the larger claimed amounts.
- The Gunters sued Farmers and American asserting specific performance, unjust enrichment, insurance bad faith, violation of the National Flood Insurance Act/regulations/federal common law, and breach of contract.
- The district court: dismissed state-law and extracontractual claims as preempted by federal law (SFIP Article IX); quashed jury demand; granted summary judgment to Farmers for failure to file a supplemental proof of loss; granted summary judgment to American because its policy was excess and primary Farmers coverage was not exhausted.
- The Eighth Circuit affirmed on all grounds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether state-law tort/extracontractual claims are preempted by SFIP/federal law | Gunters: §4081(c) and state remedies should permit state-law claims against WYO insurers | Farmers: Article IX of SFIP expressly preempts state-law claims and limits remedies to federal law and contract claims | Preempted: Article IX bars state-law and extracontractual claims; federal common law limited to insurance contract principles |
| Whether plaintiffs are entitled to a jury trial on breach of contract (SFIP) | Gunters requested a jury | Farmers: NFIP involves federal funds; jury right not provided by Congress | No jury: breach claim involves federal funds; statutory right to jury absent |
| Whether failure to file a supplemental proof of loss bars recovery of additional amounts | Gunters: timely filed a proof of loss for undisputed amount; that should permit suit for more without another proof; estoppel/duress/repudiation/due process defenses | Farmers: SFIP requires signed, sworn proof of loss within 60 days for each claimed amount; strict construction bars additional recovery absent supplemental proof | Bars recovery: strict proof-of-loss rule applies; failure to file supplemental proof of loss precludes additional recovery; estoppel/duress/repudiation/due process arguments rejected |
| Whether American (supplemental insurer) must pay before Farmers' policy is exhausted | Gunters: American should pay even though Farmers paid less than policy limit (citing Waste Mgmt.) | American: policy expressly excess; Arkansas law requires exhaustion of primary insurer before excess coverage applies | No recovery from American: policy is excess; primary Farmers policy not exhausted; American not liable yet |
Key Cases Cited
- Mancini v. Redland Ins. Co., 248 F.3d 729 (8th Cir. 2001) (SFIP proof-of-loss must be signed and sworn and strictly construed)
- DeCosta v. Allstate Ins. Co., 730 F.3d 76 (1st Cir. 2013) (insured must file supplemental proof of loss to claim amounts beyond a signed proof of loss)
- Wright v. Allstate Ins. Co., 500 F.3d 390 (5th Cir. 2007) (SFIP "federal common law" directs courts to standard insurance principles, not to create extracontractual remedies)
- Shuford v. Fidelity Nat'l Prop. & Cas. Ins. Co., 508 F.3d 1337 (11th Cir. 2007) (Article IX amendment reflects intent to preempt state-law claims)
- Waste Mgmt. of Minn., Inc. v. Transcontinental Ins. Co., 502 F.3d 769 (8th Cir. 2007) (interpreting exhaustion principles under state law context)
- Jacobson v. Metropolitan Prop. & Cas. Ins. Co., 672 F.3d 171 (2d Cir. 2012) (discussing repudiation doctrine applicability to SFIP context)
- Studio Frames Ltd. v. Standard Fire Ins. Co., 369 F.3d 376 (4th Cir. 2004) (contrasting position on repudiation doctrine for SFIP)